Michael Fridjhon: Cape wine’s vanishing middle and the struggle for survival
By Michael Fridjhon, 19 March 2025
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The Cape wine industry looks nothing like the beast which emerged from the era of isolation. Back in the early 1990s we had a few hundred producers – mostly co-ops and mid- to large size estates. It was possible for the country’s biggest liquor supermarket (Benny Goldberg’s in Johannesburg – for many years the largest in the world) to stock almost every wine bottled by a cellar in the Cape. In the past 25 years much has changed: there are now over 500 wineries, the vast majority of which produce under 15,000 cases. A significant percentage of them probably bottle less than 6,000 cases. The industry that readers of Winemag.co.za are interested in represents an infinitesimally small component of the country’s wine-making enterprise.
The numbers offer a clear sense of these proportions. In 2023 South Africa produced 775m litres of wine (excluding distilling wine, and wine destined for pot-still brandy). Exports totalled a little over 300m litres, leaving the domestic market at roughly 450m litres. The annual South African harvest comes in at about 1.2m tonnes. Around 10% of the country’s cellars (so less than 50 of them) crush half the total crop. The smallest 50% of the nation’s producers together process no more 2% of the harvest.
The most fashionable/desirable/geeky wineries comprising this segment – in other words, the producers that Winemag readers are most likely to want to follow – number less than 100. It’s a safe bet that most of them sell less than 10,000 cases of wine under their own label. Together they total no more than about 0.1% of the total Cape wine industry. Since numbers like this are often hard to visualise here’s a useful way of presenting it: if you unwrapped and stood in a single pile five reams of photocopy paper, each ream with 500 sheets of paper in it, the high-end small volume producers I’m talking about would represent a single sheet on the top of the pile.
So it would be a fair question to ask why we even bother about them? Most are too small to justify a retail presence, except in the most boutique of outlets. The successful ones – probably no more than 20, if that – sell most of what they produce on allocation via their mailing lists. They have the lowest overhead and the highest margin. The next tranche generally produces slightly larger volumes and has to find a way of getting a few wines onto restaurant wine lists (mainly, but not exclusively, in the Western Cape where restaurants are more attuned to the kind of hand-sell required and the winery can manage the logistics).
But of course we do care about them, some because they are the cutting edge of Cape wine, others because they are believed (mainly by virtue of shortage) to be that. It’s not always easy to tell which will survive the attrition of time and fashion. There are many start-ups fuelled by passion and creativity. But it takes much more than these components alone to make a sustainable business. Commercial aptitudes – rather than the determinants of wine quality – are even more significant in terms of survival.
You can make the finest and most interesting new-wave wines but if you cannot connect with customers, supply the wines they want when they want them, manage your finances and collect your debtors, your chances of remaining the controlling force in your business are zero. There are plenty of talented winemakers whose failure to manage the sales and administration side of their enterprises has cost them their dreams. Some stay, proprietors in name only; others, disillusioned, move on.
It was the enormity of the commercial challenge that led the late Anton Rupert to create The Bergkelder partnership. Here some of the best (and best known) estates of the day delegated (some would say abdicated) their marketing and business management so that they could get on with the farming and basic winemaking. That it didn’t work out for them is partly due to how the deal was structured, and partly to their own neglect. Either way, what the set-up highlighted then – and is no less true now – is that making good wine is worth very little if you cannot develop a market for it and can then get it to the consumer.
This, more than anything else, is the greatest challenge facing the Cape wine industry today. We have creativity in bucket loads, more interesting old vineyards than can profitably be exploited, and a model which sees wines produced for relatively little in hard currency terms. What we cannot solve is the problem of a cost-effective route to market, to connection with customers/consumers at home and abroad (the marketing challenge) and delivery from cellar to table (the logistical chasm).
The result is that our winemakers are like artists in a garret, compromised because they cannot sell enough wine and cannot own enough of the retail margin. Seen from the outside, the Cape wine offering appears as a plethora of undistinguished and indistinguishable small labellings, impossible to differentiate and improbable to engage with. The gap between the large, commercially successful operations and this endlessly long tail of amorphous “works of art” is so vast that the spectrum upon which both sit appears infinite. There is very little middle ground. This is why we have become an industry either of commercial brands despised by the wine geeks, or of minuscule, largely transient cuvées whose very evanescence adds to their appeal but whose prospects of survival are less than butterflies in the gardens of Hiroshima on the morning of 6 August 1945.
- Michael Fridjhon has over thirty-five years’ experience in the liquor industry. He is the founder of Winewizard.co.za and holds various positions including Visiting Professor of Wine Business at the University of Cape Town; founder and director of WineX – the largest consumer wine show in the Southern Hemisphere and chairman of The Trophy Wine Show.
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South Africa’s wine industry is often discussed as a tale of two extremes—large commercial brands dominating supermarket shelves and small, cutting-edge producers crafting sought-after wines in limited volumes. But the real pressure point, the space most vulnerable to collapse, is the middle tier: the independent estates and co-ops that must own and maintain both vineyards and cellars.
Unlike smaller boutique producers, who can remain agile by renting cellar space, leasing equipment, and sourcing grapes rather than owning vineyards, mid-sized wineries have fixed overheads that are becoming increasingly unsustainable. The costs of farming—rising input prices, electricity hikes, labour, and compliance—are escalating faster than margins allow. Excise duties keep climbing, further tightening the squeeze.
Perhaps the most concerning trend is the decline in new vineyard plantings. With capital increasingly scarce, many mid-sized producers are forced to hold onto aging vineyards they can’t afford to replant. The long-term effect? Shrinking yields, lower quality fruit, and a growing inability to compete—both locally and internationally.
Jenny Crwys-Williams | 25 March 2025
God, this is bleak. Your last sentence devastating.
Guy C | 24 March 2025
Very much a novice wine lover, and this is my first comment on the website – although I used to work in an office a few doors down from the eminent Tim James (if that counts as any kind of credential?).
I have a lot of respect for the industry, especially in light of the challenges laid out in the article, and as the one commenter explained how the retail price of wine builds from the cellar through the various ‘add-ons’ (for want of a better word).
One thing I’ve been doing – but I realise not all have the time or inclination (or patient/sufficiently indulgent spouse/family) – is reading the latest Platters almost literally cover-to-cover, and been discovering and learning about the boutique wineries through those pages. For wines/wineries that pique my interest, I go and look up online and note (a) typical price and (b) where I might be able to find them, with cascading ‘levels of convenience’ beginning at supermarket, then bottle store, then online wholesaler and, if all else fails, the winery itself. This is largely because I don’t have the budget (like probably many consumers, albeit maybe not necessarily reading this) e.g. to buy a case of a single ‘grand vin’ at a time (and seldom have the time to visit the wineries in question, especially those beyond the Coastal region), and like to mix and match so that, e.g., I can ‘subsidise’ the outlay on a Boekenhoutskloof Cab with two or three Wolftraps, and end up with a hopefully-respectable mixed case at not-eye-watering cost.
I don’t know if anyone else does this? I realise the industry cannot rely on most consumers doing research to such extent, so not a solution to the bridging-the-gap challenge expressed above.
Allimuthu Perumal | 23 March 2025
Only wine shop that I have been to is the one on Kloof Street Cape Town in the Mall the lady can talk of rich history of the producers and their farms.The rest are just working.
Allimuthu Perumal
Jannie Kellerman | 22 March 2025
Wine ethical trade is killing us wine farmers. Costs exceed income.
And climate, South African politics is against us.
Jabulani Debedu | 24 March 2025
“Wine ethical trade is killing us wine farmers.
“And climate, South African politics is against us.”
I’m intrigued, care to elaborate what you mean by this Jannie?
Jan | 22 March 2025
30 years ago I had a hard in depth look at the wine industry. From suitable soils, etc all the way to consumer trends. Cash flow budgets. I walked away.
Nothing has changed. I will still walk away today.
Gregory de Bruyn | 21 March 2025
Good comments, mostly. I’ve had to break down the figures to clients and investors on occasion. The producer, estate, whatever, gets paid, say, R50 for a bottle. For that, he has to plant and propogate vineyards, build and run a winery, make the wine, bottle it, certify and duty it and probably deliver it to a wholesaler. The wholesaler adds 40 to 50%, passes it on to a retailer or restaurant, who adds anything up to 300% for delivering it to a table. The buyer pays something like R300 for the bottle that the producer probably made a R10 profit from. Who is
actually killing the trade?
Danny Danielson | 20 March 2025
The main problem is the retail sector making all the money.
Come on wine industry cut them out , this is the online period. You can make your margin without them. Think think think this is not hard . When you go to a wine estate and told it’s cheaper to buy at Tops that’s where the shit starts.
Vicky Croxton | 20 March 2025
Wish you would name the good small vineyards The mind boggles going into a retails store Like Tops and fine a good wine
No qualified staff to advise
Van Eck | 20 March 2025
How can we make contact or know about the small wineries?
Jenna | 20 March 2025
It should be mentioned that many larger cellars are making it tough for smaller producers to make sales at a higher price point by selling really amazing, finely crafted, quality wines at an arguably criminally low price point. I’m talking about Durbanville HIlls’ Collector’s Reserve and Tangram , Legend and Reserve Pinotage at Windmeul Kelder, La Cave at Wellington Wines, the Dry Land collection at Perdeberg….the list goes on. Many bigger cellars are also playing the finer wine game and can afford to do so. Smaller producers seem to attract a lot of business with personal connections and sentiment, which takes a lot of marketing talent, time and effort to achieve. It honestly leaves me awestruck by how hard some of these producers have worked to get their wines into the spotlight – that client basis is also a lot more loyal because of those personal connections to their consumers and on-con retailers that bigger cellar’s often miss.
Pierre Guerin | 19 March 2025
Firstly you create a product and you make it unaffordable to most….one does not need a degree to see this.
Secondly you are allowing our retailers “CHECK…..” to make all the profit
OLIVE Kok Oliver | 19 March 2025
Hello from Strand, thanks for a great article overview of the Wine Industry & challenges.
I hope it’s not to late to invite Michael to the BRICS AGRICULTURE TRADE & INVESTMENT SUMMIT 27-29 MARCH IN DURBAN.
Look forward to hear from you.
Thank you,
Olive
Greg Sherwood | 19 March 2025
It seems it is a commercial problem right around the world. But in truth, it’s always the small, esoteric, boutique, hard to find, wines of normally high quality produced in small volumes that are the real fuel that keep the entire wine industry interesting and desirable, with their trickle-down halo effect benefiting almost every larger producer. Of course the big producer brands often do most of the heavy lifting, but they also have much to be thankful for to all the small brands out there that keep the category vibrant, interesting and continually evolving. Perhaps the middle ground producers should try bringing a little bit more excitement and innovation to the party??
Angela Lloyd | 19 March 2025
When South Africa Wine was established, I understood one of the specific goals was to assist the smaller producers. As far as I am aware nothing has yet materialised. A local marketing body has also often been called for, again the theory has yet to be realised.
I know of several one-person producers. I love their innovation and great wines & am in awe of their multi-tasking: sourcing grapes, winemaking – sometimes in more than one cellar – bottling, sometimes during harvest, labelling, getting out both locally & abroad to sell & do all the admin.
The least the industry could do is to give them assistance, which will benefit all, as these wines & the people behind them add immensely to the enviable reputation of our wines, here & internationally.
david1 | 19 March 2025
I really enjoy reading the sage words on wine in articles from Mr Fridjhon. The wisest man in the SA wine industry , ignore his words at your own peril because he speak the truth !